Thermal residual stresses have been measured using X-ray diffraction in an Al-2% Mg matrix with 10, 20 or 26 vol % Al2O3 Short fibres. Stress measurements were made at room temperature as well as in situ at elevated temperatures up to 250 degrees C. The thermal stresses arise due to the difference in coefficient of thermal expansion (CTE) between the matrix and the reinforcement. The largest CTE is found in the matrix, resulting in tensile residual stresses after a temperature drop, e.g. after processing or annealing. A high fraction of reinforcement implies higher matrix stresses than a low fibre content. The stresses decrease with increasing temperature for all fibre volume fractions. Measurements are compared with calculations using a modified Eshelby model for equivalent inclusions. Parameters taken into account in the model are coefficient of thermal expansion, Young’s modulus, and volume fraction and geometric shape of the reinforcing phase. A good correlation between calculations and experimental results has been found, bearing in mind that no plasticity is taken into account in the Eshelby model. The plastic behaviour of the composites has been described using a model based on a rigid spherical cavity in an elastic-plastic matrix.